I have built a spreadsheet. It has 847 rows. Each row is a community bank in the United States with a market cap below $200 million, a price-to-tangible-book ratio under 0.85, a non-performing loan ratio below 0.4%, and a CEO who has been in the role for at least twelve years. I update it every Sunday from 6 AM to 11 AM while my family attends church without me. I have visited the headquarters of nineteen of these banks in person. I have eaten a complimentary lobby cookie at each one. The cookies are how you can tell. A bank with a good cookie is a bank that respects its depositors. A bank with a stale cookie is a bank that will be acquired within 36 months at a 40% premium. I am never wrong about the cookies. The cookies have never lied to me. The cookies are the only thing left that tells the truth.
Why is Elon Musk reserving 30% of the shares of SpaceX for retail investors? Heโs doing that because retail investors are the only ones stupid enough to pay a $2 trillion valuation that would imply a 125x price-to-sales multiple. Institutions werenโt going to cover the allotment here.
Research shows that IPOs that allocate directly to retail investors lose over 60% of their value, on average, within a year, underperforming their peers by about 20%. Why? Theyโre priced more aggressively, and retail trading platforms push shares and hype companies up, leading to big IPO spikes.
If this thing gets out anywhere near a $2 trillion valuation, you do not want to be in this stock three, six months out. Even Musk and his jazz hands canโt figure out a way to justify anything resembling this valuation.
Source: Prof G Media